Bipartisan push imperils ethanol mandate

A group of eight senators unveiled legislation Thursday to repeal the federal Renewable Fuel Standard’s contentious ethanol mandate, saying regulations are pushing up corn prices and threatening the oil-and-gas industry.

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Introduced by Sens. Dianne Feinstein (D-Calif.) and Tom Coburn (R-Okla.), the Corn Ethanol Mandate Elimination Act of 2013 would effectively repeal requirements for the amount of ethanol that is blended into gasoline.

“The time to end the corn ethanol mandate has arrived,” Coburn said in a written statement. “This misguided policy has cost taxpayers billions of dollars, increased fuel prices and made our food more expensive.”

The Renewable Fuel Standard (RFS) requires annual increases in the amount of renewable fuel that must be blended into the total volume of gasoline refined and consumed in the United States.

Enacted eight years ago, the standard has increased steadily, requiring refiners and blenders to use 16.55 billion gallons of renewable fuel in 2013. More than 13 billion gallons of this total will be met by the use of corn ethanol, the lawmakers said.

The mandate has direct implications for the nation’s food supply, Feinstein said.

“Under the corn ethanol mandate in the RFS, roughly 44 percent of U.S. corn is diverted from food to fuel, pushing up the cost of food and animal feed and damaging the environment,” she said.

The lawmakers are also responding to concerns about the so-called “blend wall.” As U.S. gas consumption declines, refiners face a point when the RFS mandate will exceed the limit at which ethanol can be blended into the fuel supply, critics say. The result could be higher fuel prices and a gasoline blend that could damage cars, they said.

The action comes a month after the Environmental Protection Agency's 2014 proposed draft of blending volumes that are lower than the 2013 requirements, an implicit acknowledgment of the concerns.

The EPA is proposing to require 15.21 billion gallons in 2014, down from 16.55 billion gallons in 2013, marking the first time the agency has lowered the target from the prior year.

The legislation introduced Thursday would remove the top-line mandate for renewable fuels, but leave mandates for non-corn ethanol advanced biofuels in place.

The American Petroleum Institute, which has called for an outright repeal of the Renewable Fuel Standard, heralded the bill.
 
“Repealing corn ethanol mandates is the first step toward protecting consumers from outdated and costly public policy,” API Downstream group director Bob Greco said.

But the legislation drew swift rebuke from the Renewable Fuels Association. Bob Dinneen, the group’s president, argued the bill comes just as the nation’s farmers have finished harvesting the largest corn crop in U.S. history.

“This is monumentally stupid,” Dinneen said. “This legislation ought to be entitled ‘The Oil Monopoly Protection Act of 2013.'"

Co-sponsors of the bill include Sens.Richard Burr (R-N.C.), Susan Collins (R-Maine), Bob Corker (R-Tenn.), Kay Hagan (D-N.C.), Jeff Flake (R-Ariz.), Joe Manchin (D-W.Va.), Jim Risch (R-Idaho) and Patrick Toomey (R-Pa.).